Advanced Pattern Recognition

Continuing to Monitor the XLP / NYA important ratio …

did this for Andy and the gang @seeitmarket: https://www.seeitmarket.com/are-consumer-staples-signaling-a-volatility-omen-17331/

here’s an update as of Friday’s close:

If I learned anything from getting my CMT it was the power of ration analysis. X/Y …. If X is stronger the chart goes up and if Y is stronger then the chart goes down. And, since we are charting securities guess what works on them –the PATTERNS. So the theory goes IF the insititutions are risk off the chart goes down and volatility is suppressed. If the institutions are risk adverse then the chart goes up and volatility picks up and stocks sell off.

Thesis:

MONTHLY of XLP / NYSE Index w/ candles being the ratio and the blue line being the NYSE Index.

Note, at EVERY major inflection of the NYSE Index the RATIO pivoted … it either inflected to go up or down BUT every move of the NYSE Index respected this move.

Monthly XLP / NYSE Index.

Note, most oversold in 6 years and slammed into the .382. Weekly bearish close … did expect it to respect this area and w/ Bradley Date, Martin Armstrong Directional Change and the note from Mike – along, and most importantly, the PATTERNS I did expect this to find support and give at least a daily BUY signal. It has not done that …but all is not lost.

Monthly XLP/ NYSE Index

Note, if we don’t find support here then we have a measured move target a little lower and, ultimately the big green target …

Daily XLP/NYSE Index

Note, the time component (somewhat of a 3 drives to a bottom but still in line w/ ‘time’ of every rally ….

Note, the 1.618 w/ an AB=CD (nice time on AB=CD) right at our .382 from the all time low

Intraday (5 minute) XLP / NYSE

Yes, we closed at the lows … but yes we ‘really didn’t’ break the lows so in order for this market to pivot and correct next week believe this level needs to hold and rally tomorrow morning.

Conclusion: believe this ratio remains important for the overall health of the market and if it can hold these lows then volatility should uptick and the market sells off. IF we breakdown from these levels THEN we’ll seek the next lower target and the market will continue top march up a wall of worry.